Buckets of Rich, Attracting Luck, and Maintaining Balance — with Jesse Itzler

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1:12Episode 306. 206 is the area code belonging to the Canadian province of Saskatchewan. In 1906, Finland became the first European country to give women the right to vote. I actually sexually identify as Canadian. I'm asexual. Got it? Sort of threading the needle between dad jokes and profanity. Go! Go! Go!

1:44Welcome to the 306th episode of the Prop G-Pod. In today's episode, we speak with Jesse Itzler, a serial entrepreneur, a New York Times bestselling author, part owner of the Atlanta Hawks, and an ultra marathon runner. We discussed with Jesse his career journey, his approach to entrepreneurship, including how it aligns with his fitness journey, and the strategies he implements to maintain balance in his life. I've seen this guy everywhere on TikTok because he has sort of a nice vibe that sort of melds his professional and personal life. He's kind of an attractive person. You're sort of drawn to him.

2:21Okay, what's happening? I'm back in London after a week in the south of France. That's right. It is about 75 degrees. By the way, there's no air conditioning in the UK. Did you know that? They don't believe in air conditioning. We do have indoor plumbing. I'll give them that. There's no fucking air conditioning. I get up last night because I'm hot because it's gotten up to a sweltering 72 degrees here. I'm like, I'm a little bit warm. I'm going to turn on the air conditioning. I'm looking for the air conditioning. And I was looking for a long time. Why? Because there is no air conditioning. What's with that?

2:51Anyways, moving on to some news. Apple became the first U.S. company to be charged for violating the Digital Markets Act, which EU regulators put in place back in 2022 to prevent online gatekeepers, air quotes, from starching out competitors. It's really interesting. In particular, in this particular instance, well, I think it's interesting. Maybe you don't. Maybe you don't. Maybe you're asexual. Anyways, in this particular instance, the regulars determined that Apple makes it too hard for app developers to steer consumers to alternative offerings. Well, you just figured that out. Under the Digital Marketing Act, Binds can be able to get this 10 % of gross revenue.

3:23For Apple, that would be up to$38 billion based on last year's revenue. Okay, let me get this. Apple makes$380 billion? How is that even possible? How is that even possible? I sold my last company for$160 million. It was doing$20 million in revenue. It literally took an act of God and me sacrificing my health and every relationship I had to get to$20 million in revenue. And these guys have gotten a$380 billion in revenue. What are they doing? Selling like a baby's kidney? What on earth are they doing over there? $380 million. Anyways, because of this charge, Apple says it will not roll out Apple intelligence in the EU this year.

4:04Well, they're taking their Apple and they're going home. And that's the problem with this type of regulation across capitalist democratic societies or G20 nations when we don't have a collective action. And it's the same problem that haunts parents with their teens with respect to depression and social media. People who say, well, can't you just take away the social media or the phone clearly don't have children. And two, there's a collective action problem. And that is, if your kid's not on SNAP and all the other eighth graders are on SNAP, that kid actually is more depressed because he or she is ostracized or feels isolated.

4:42And it's a bit of the same thing with regulation. And that is, it just strikes me as so crazy that we wouldn't get together with my idol, Marguerite Vestier. By the way, quick story. You're a competitive commissioner. You're a competitiveness commissioner? I was on the Acela. I never take the Acela. I think it's dramatically unimpressive. I'm on a lot of trains in Europe, and then I get on the Acela, and I think, well, maybe we are going to. Maybe it is the peak of our, I don't know, society or peak America. Anyway, and I saw this woman knitting, and I'm like, that looks like Marguerite Vestier.

5:15And it was. She's sitting there meeting in between breaking up Apple and big tech. And I went up to her and said, could I have a picture? and she was so friendly. I don't think she has a lot of fans in the U.S., but I like her. I think she's unafraid, super smart, does her homework. Anyways, an example of a great regulator. But they're saying they're not going to roll out intelligence, so they're going to take it home. And the problem with not having collective action or joint regulation is that these big tech companies as a group have now become more powerful than any specific country, maybe even the European Union.

5:47We'll see. We'll see. And they're not afraid to say no. This is more than them saying we don't want to comply. They're saying if you start regulating us, we don't want to play ball. And I think that where we would be best served is if we had some sort of multilateral cooperation around these things. Otherwise, it's just a race to the bottom. And I wonder if this sort of sets off a race where a bunch of big tech companies are not going to be afraid following Apple's lead to say, sorry, we're not playing your super regulation, concern for the commonwealth, monopoly-powered games. Microsoft is also facing charges for anti-competitive behavior.

6:22Regulators do not like that the firm bundles its Teams app with the Office suite. Microsoft hasn't seen this type of antitrust in more than a decade. So, okay, what would be the biggest tax cut in history if the U.S. and China kissed and made up? China has the world's best supply chain still. India's coming up, Vietnam, Mexico, all pretty strong. China, the gangster supply chain, right? Flexible. People work so hard. Quick story. Quick story. I used to run a company called L2C above, the company that I basically killed and pillaged to get to 20 million in revenue for. We did a decent amount of business in China.

7:02We didn't work for Chinese companies. I found Chinese companies don't want to pay for anything. Go figure. But American companies looking to get into China would hire us to look at Chinese data around their digital footprint. And one of my clients, I think it was Estee Lauder, China. They'd made a big bet on China. And I was doing a swing through China to do events. And I get there like 11 p.m. on a Saturday night. I don't know. I'm like so bass-ackwards. And I called the office of the head of, I think it was Estee Lauder, China, and to tell him, I'll see you Monday at 9 a.m. It's referred or forwarded to his cell phone.

7:36He picks it up. And I said, I'm so sorry. It's Saturday night at 11 p.m. I didn't mean to wake you. And he said, where are you? And I said, I forget what hotel it was. I think it's a higher agency. That's a sky lobby that's like 1 ,100 floors into the sky. And he said, oh, you're there? He said, are you awake? I'm like, yeah, I'm awake. He said, well, I'll come over right now. That's fucking China. That's when I'm like, oh, God, these people take themselves pretty seriously. You call the head of Estee Lauder China and he comes and meets you at 11 p.m. on Saturday so he can get a jump on his Monday morning.

8:01Think about that. Anyway, China takes themselves very seriously. And the biggest tax cut in the world would be if the supply chain and the innovation and IP of the U.S. got back together. What do we have? We have an inflation problem. What do they have? An unemployment and growth problem. Boom. Let's kiss and make up, ladies and gentlemen. And the more we get along and the more people who go back and forth between the China and the U.S., the less likely we are to go to war with each other. The less likely they are, I believe, to invade Taiwan, the less likely we are to start shooting or entering into a hot war with their Navy, if and when they invade Taiwan, if we're all making a lot of money and interacting and speaking to each other, the second biggest tax cut in history, the second biggest tax cut would be if we invested 10, 20,$30 billion, gave it to Lena Khan and Jonathan Cantor, and basically totally overfunded the DOJ and the FTC and went on a breakup Lollapalooza.

9:00Why? Why? Everything from chicken to home renovations to beef to cereal to confections to search engines to social media is controlled by a small number of companies. And what happens to an industry when it becomes too concentrated? They learn that they don't have to make great products. They can just raise prices and there aren't that many options. And then, boom, what happens? Prices go up. And the traditional means of establishing anti-competitive behavior is to look at prices. But how do you establish those metrics around companies that offer their products for free? Well, what happens is Amazon becomes a monopsony.

9:36And that is, if you want to be on the Amazon platform and have access to 50 cents on the e-commerce dollar, it's probably more like 70 if you take out groceries and gasoline, you have to be on their platform. And what do you know? The fees they charge their retailers on the third-party platform have grown dramatically, I think from something like 24 to 40 % in the last decade. Okay, that is monopoly abuse. And what do you know? What do you know? How would you describe the Apple App Store? Provide security, technology. You know that the people on the other end are going to provide a service in exchange for money, secure platform, communication.

10:05Oh, wait, it's a credit card company. What do we need? What do we need? We need that Apple App Store not to be charging 30%, but to be charging 2 % or 3%, like every credit card company, but they get away with 30%. Why? Why? Because they have a monopoly on essentially people who spend money online. This would be like you own the train tracks and you own the trains and you see where apparel is being dropped off and you use that data to go into your own apparel business. And by the way, you don't charge your own owned and operated apparel company any transit fees and they can charge lower fees and no one can compete with them because you start a line of athletic wear or yoga wear and it costs half as much as Lululemon and you get to see where Lululemon is selling and you have your store called Apple Lemon and you charge half the price and you can still make money and you just wait until Lululemon dies.

10:53And perhaps Lululemon's yoga pants don't get there as quickly as yours do. You see, you get my drift. You get my drift. So the fastest way to lower taxes on consumers globally would be to go in to the three or four biggest companies in every major category and break them up and oxygenate the economy. Similar to when we broke up AT &T, what were the arguments? Well, we need to be big so we can invest in phone lines and CapEx. Okay, We've heard that before. We're good people, and it's a good brand, and we're going to buy off a bunch of politicians. Boom. They go and they break it up, seven baby bells.

11:27Each of those companies is worth more than the original AT &T within 10 or 12 years. Oh, and by the way, what did we have? We unleashed tremendous innovation because guess what? We had fiber, we had data, we had optics all lying fallow at Bell Labs, and they didn't want to compete with their own technology. This would be the most dramatic tax cut in history, second only to China, and that is every company would begin competing for consumers, lowering their rents on companies, consumers, and parents. You'd have more innovation unlocked. Look what happened at Google. Google basically invented AI.

12:01And what do you know? They were sitting on AI until ChatGPT or OpenAI or Microsoft AI came in and said, this is a real marketplace and basically scared the shit out of Google who was sitting on their hands. Why? Because they didn't want to challenge search. So they kept it kind of on the lowdown. They didn't really go hard at it. And that's what happens. There's a ton of technologies and innovation waiting to be unleashed if we break these companies up. The EU is taking action ahead of us, recognizing they get the majority of the downside. They get all the teen depression, the weaponization of the elections, the income inequality, the monopoly abuse, but they get a fraction of the upside.

12:36There aren't that many hospital wings. The university is named after Google or Facebook billionaires. Like, fuck that. That's stiff in their backbone, and they are starting to go gangster here. But if we don't have collective action and cross-border cooperation, it's going to be a race to the bottom, and we're going to end up in an even worse place with more depressed kids, a small number of people who make a shit ton of money, but a middle class that is struggling, labor that continues to see their wages erode, and products that never recognize their full potential because they're totally focused on monopoly abuse as a strategy as opposed to innovation.

13:07Apple was already fined$2 billion back in March for its domination in the music streaming market. That's fine. It needs another zero. These fines have become meaningless. $2 billion is nothing, nothing for Apple. Apple will lose or gain$2 billion in market cap in the next 10 minutes in the marketplace. We need to add a zero to all these fines. We need to go on a breakup Lollapalooza. We'll be right back for our conversation with Jesse Itzler. Tuesday on NBC. Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands.

13:50This is a huge opportunity. This is the battle for the next big idea. This is not play-play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals.

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15:14welcome back here's our conversation with jesse itzler a serial entrepreneur best-selling author and ultra marathon runner jesse where does this podcast find you uh atlanta georgia where i live atlanta nice um so let's bust right into it uh give us your kind of origin story jesse Walk us through your background and how you ended up doing what you've done. I've had a very unconventional journey and worn a lot of different hats. I started out in the music business right out of college. I went to school in D.C. at American University. I was signed to a record label called Delicious Final, and that didn't go great for me.

15:53I ended up getting dropped from the label, and I started doing theme songs for sports teams like the Knicks theme song, which is called Go New York Go, a bunch of other teams, and ultimately started a music marketing company that I sold to a public company. And then I'm a big runner. I've done a lot of long-distance ultra races. And when I was training for a 100-mile race, I discovered Coconut Water in 2006, 2007. Ended up partnering with a coconut water company called Zico, which we sold to Coke, Coca-Cola. And then just wrote a book, had four kids, got married. moved from New York to Atlanta and really just followed things that I love to do and launched a bunch of businesses.

16:38Some worked and some didn't. And here I am. So let's go through the businesses. What was sort of your approach to starting businesses? Which ones worked? Which ones didn't? And if you could draw a line through or try and find signal from the noise in terms of why companies worked or didn't work, what would that signal be? Well, jumping right to that point, I think at the end of the day, usually for me, it's come down to management and that's not hiring people that could take my idea and bring it to fruition. I think the best idea is that they don't have good leaders and good managers will struggle.

17:12And, you know, Scott, I really enjoyed my twenties, man. I tried a lot of different things. I slept on 18 different couches from 18 to 22, different friends putting me up, going couch to couch, trying different businesses. I called, I sold carrot and celery sticks door to door. I was a kiddie pool attendant. I cleaned pools. I sold meat, chicken, door to door. I just tried so many different things. When I was 28 years old, I was a guest on a private jet. And when I walked onto the private jet, it was like the scene in The Wizard of Oz when everything in life goes from black and white to color.

17:48And I was like, people fly like this. This is insane. I want to fly like this. And that's how we got the idea to start this company called Marquee Jet. I think a lot of the businesses that I've been involved with, some which worked, many more which didn't work, entrepreneurs can do two things. They can make something better or they create something new. And they were all, all the businesses that I've been involved with were a function of just identifying things that fit one of those two categories. Either like, wow, like I'm a runner. I would love, what's the natural, healthy way to get electric?

18:21Like coconut water emerged through necessity and need and just keeping my eyes open for things that would make my life easier or better. And that's how those ideas popped into my head. So talk about Marquee Jet. What gave you the vision? I mean, it's not easy to start a explain the concept, how it differentiated from other fractional companies are owning a plane. And what was your niche in the marketplace and walk us through kind of what happened there. Yeah, well, at the time that we started this company, which is around the year 2000, 99, 2000, there were really only three ways to fly privately.

18:59You could buy your own airplane, which was incredibly expensive. You could charter a plane where there are a lot of inconsistencies. Who's flying the airplane? How old is the airplane? Who's managing the airplane? Or you could buy a fraction of an airplane, which also is a long-term commitment and a lot of money. That's what NetJets was doing and FlexJet and other fractional jet companies. And I couldn't afford any of those options, and they weren't realistic for me. I wanted to take two or three flights a year with some friends, treat my parents, maybe a business trip. So our idea was a 25-hour, basically, debit card.

19:34You prepay for 25 hours, put like 50 or 100 grand down for 25 hours, and if you fly two, you have 23 hours left. You didn't have to own the airplane. The plane was available on short notice. And you're right, we had no aviation experience and we had no airplanes and we had no money. But we went to the 800-pound gorilla, NetJets, which had 650 planes, the largest private jet fleet in the world, and owned by Warren Buffett. And we pitched them this idea of a 25-hour jet card because we needed airplanes. and the CEO, Rich Santulli, threw my partner and I out of that meeting in 12 minutes and literally said, if you think I'm giving two 28-year-old kids who probably didn't break 1 ,000 on their SATs access to my planes, that's not going to happen and kicked us out.

20:23And the president grabbed us and said, wait a second, I think there's something here. I want you guys to come back and repitch this next week. I'm going to set up a follow-up meeting. I want to hear more. We came back a week later and we brought in our own focus group and we literally set up eight chairs in the boardroom and one by one, eight people, a powerful real estate mogul from New York, a sports agent, they stood up and said they would never buy a fraction, but they would buy a 25-hour jet card. And ultimately, we got a deal to use their planes and put our program under the NetJet fleet.

21:00So our niche was, you know, was catering to an audience that couldn't afford to buy their own plane. We made private aviation more affordable to the masses and it worked. Netchats, I would think, would want to do it in hopes that they could get people addicted to this and then move them up to fractional. Is that accurate? That's 100 % accurate. We were a marketing arm and yes, we were a farm system for their larger fractional program. And so tell me about the industry now in terms of fractional. How would you differentiate between kind of give us a lay of the land and how the market that business has evolved and eventually Berkshire slash NetJets bought you out, correct?

21:42Yeah, so I've been out of it for almost 13 years now. So I don't follow the industry super close. I'm just a customer. But I know a lot. It's a really difficult, capital-intensive business, Scott. I think when we started, there were like 50 companies that put a flag in the ground that said they were in the private jet space and like two were profitable. It's a really hard business to survive in. NetJets had the luxury of being backed by Berkshire. So they built an incredible infrastructure. But now, 13 years later, I'm not 100 % sure how it's evolved, but it's a lot of the same. It's still packed by your own plane, travel by a fraction of a plane, charter, or some kind of card or one-off program.

22:28And give us the journey around coconut water. So my models, I'm not a great operator. I know what my weakness is. I'm a terrible operator, a much better marketer, idea guy. And following piggybacking off of that model, we're like, wow, I can come up with an idea and partner with a company that has an expertise and I could just be a marketing arm for them. I went to Coca-Cola with this idea for coconut water and a PowerPoint and said, I want to get to the coconut water business. At this time, it was a very, very small category in beverage. and they said, we see this as an evolving area, but we don't buy PowerPoints.

23:12But if you find an existing company out there that's proven that they can source the product, sell the product, they're on the shelves, et cetera, and you come in to help market it, we'd love to be in business with you. So we went to a company called Zico Coconut Order that was doing about two or$3 million, maybe a little bit more in sales at the time, and we did a three-way deal. My group, my company, Sika, which existed in Coca-Cola, and Coke had an option to buy 100 % of the company down the road. And two years later, they executed that option. So we got it really hot, really fast. And we did that through PR, through we had a lot of celebrity investors.

23:57The old model in beverage was we're going to pay people as endorsers, but the consumers are pretty smart now. and they see that. Our model was write us a check, be an investor, Mr. and Mrs. Celebrity, and help us promote it as an owner of the company. And that model worked. And now a lot of, you know, a lot of companies have followed suit off of that model. I like the way that you define or you view success and luck. What has been your approach to putting yourself in situations where luck can find you? Well, I think as an entrepreneur, a big part of it is luck. and I've been super lucky and probably way more lucky than good but I put myself in situations where I can attract that luck I used to come home Scott from like you know I walk into Marquee Jet and I'd be like I got a sale last night we had a bell I would ring the bell they'd be like what you mean you at the bar same bar I was at I'm like yeah but you left at 11 o 'clock I stayed till 2 and I got the sale.